South Korea Financial Services Commission has made clear that it has concluded plans to impose tax on nonfungible tokens by 2022. The tax law would impose a 20% tax on income from virtual assets amounting to over 2.5 million as at January 2022.
The country’s Financial Services Commission vice chairman Doh Kyu-sang affirms that only NFTs would be categorized as virtual assets, hence suitable for other income taxes, where he refers to those used for investment or payment on a large scale.
It has been noted lately that crypto taxation has become a key part of discussion in recent regulatory debate.
Where some countries are imposing capital gain taxes based on existing rules, while a few nations have designed new tax regulations on cryptocurrency transactions.
The South Korea Financial Services Commission made a definite stand last month while issuing a public statement affirming that NFTs are not virtual assets thus would not be regulated.
Korean lawmakers now appear to view NFTs in the same light of being taxable as cryptocurrencies. However, a planned tax on cryptocurrency gains was set to take effect in January 1, 2022 however may now be delayed given political pushback.
Noteworthy, it has imposed a 30% tax on crypto related transactions which is designed to take effect on the aforesaid date.
South Korea according a reliable information has been taking measures to regulate the crypto market, where it looks to eradicate or possibly reduce money laundering to the barest minimum.
All 25 changes reviewed according to the August guidelines were seen to have inadequate levels of preparedness with no meeting all the entry registration requirements.
The Finance Ministry disagrees with FSA’s evaluation of NFTs and believe it’s still controversial to categorize them as virtual assets.
The country has emerged as one of the most regulatory sound crypto ecosystem after its recent implementation of the Anti-Money Laundering guidelines.
The new regulations pushed out hundreds of unregistered comprising of small and medium-sized crypto exchanges, as they failed to fulfill the basic minimum criteria for registration.
As the NFT marketplace expands exponentially, the debate between regulation and innovation forms a pivot and remains evenly controversial in every sense of the market.